Deregulation didn't provide anticipated savings

More than a decade after Ohio deregulated its electricity industry, the utilities that were most expensive have gotten cheaper and the cheapest have gotten much more expensive.

Dan Gearino, The Columbus Dispatch

More than a decade after Ohio deregulated its electricity industry, the utilities that were most expensive have gotten cheaper and the cheapest have gotten much more expensive.

Lawmakers had hoped for across-the-board savings.

American Electric Power, which serves most of central Ohio, has had some of the largest increases.

Comparing electricity rates is complicated. There are typical rates, which are the amounts paid by a hypothetical regular household or business, and there are average rates, which are usually lower than typical rates and reflect the combination of all rates, including discount programs.

As of October, a typical residential customer of AEPís Columbus Southern Power subsidiary paid 14 cents per kilowatt-hour, according to a Public Utilities Commission of Ohio rate survey, up 41 percent from five years earlier. A customer of AEPís Ohio Power subsidiary paid 11.7 cents, up 44?p ercent. No other Ohio utility had a larger percentage increase.

Despite the increases, Columbus Southern and Ohio Power both have average prices below the national average. Their increases, however, far outstrip the 10 percent national average price increase for residential electricity during that span, and the 13 percent increase in consumer prices.

The Dispatch used October rates because the more-recent November and December rates include a refund of a charge mandated by an Ohio Supreme Court decision, which made those rates temporarily low.

The smallest percentage growth was FirstEnergyís Ohio Edison, which was 12.7 cents per kilowatt-hour, an 8 percent increase in the past five years. It has become less expensive than Columbus Southern ó a sharp reversal from a decade ago, when FirstEnergy customers had the highest prices.

Several factors help explain the growth in AEP rates, including pent-up costs because of a rate freeze in the early 2000s, rising coal prices and the need for environmental retrofits of power plants.

AEP executives point out that the companyís rates have been among the lowest in the state for decades. Because they started at such a low point, the percentage increases look high, though Columbus Southern rates are about average and Ohio Power remains the lowest.

ďItís still a heck of a bargain,Ē said Michael Morris, AEPís chairman.

Columbus Southernís average price has risen to the point of virtual parity with the national average. This year, Columbus Southernís residential average is 11.5?cents per kilowatt-hour, according to the company, and the equivalent national figure is 11.8?cents, according to the Energy Information Administration, a difference of 2?percent.

Although Ohio Powerís average price remains well below the national average, that gap will shrink under a new rate plan that will begin next year, which gives Ohio Power larger annual increases than Columbus Southern. This is part of AEPís attempt to gradually equalize the prices between the two territories as it prepares to merge the operating companies into one unit .